Anti-Obesity Drug a Big Win for Biotech

The stock of the week in the biotech world was, hands down, Arena Pharmaceuticals.

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Shares of Arena Pharmaceutical soared to a four-year high after the FDA approved the biotech’s anti-obesity drug, Belviq — the first weight loss drug to hit the market in 13 years.

The approval was a sweet victory for Arena Pharmaceuticals, and more importantly, for shareholders (72 percent of shares outstanding are owned by the retail investor). Shares of Arena rose as much as 52.5 percent during Wednesday’s trading session, hitting an intraday high of $13.5 after t he obesity drug was approved.

Clearly, a lot of excitement going on here. Even when looking at platforms like StockTwits, Arena had been trending over the past five months, as more investors grew optimistic about Arena’s weight loss pill.

“Over the past five months, we've seen social momentum increase and accelerate on Arena Pharmaceuticals," said Phil Pearlman, Executive Director of StockTwits. "This has served as an invaluable leading indicator for price appreciation for those monitoring StockTwits closely over that period."

And the weight loss market is about to heat up — with Vivus’s anti-obesity pill, named Qnexa, awaiting a decision from the FDA by July 17.

But is there room in the market for two anti-obesity pills?

Senior biotechnology analyst Simos Simeonidis at Cowen & Co. thinks so. “The anti-obesity space has the potential to be a large market, with multiple lines of therapy, since most patients will probably either not respond or not achieve the desired weight loss, and will thus end up trying more than one agent.”